Moody’s has history of flawed ratings, raising questions about credibility; negative.

From Yahoo Finance: 2025-05-19 09:47:00

Moody’s, the credit rater that downgraded federal bonds from AAA rating, has a history of flawed ratings. The agency gave the highest credit ratings to subprime mortgage-backed securities before the 2008 financial crisis, leading to investor losses. Moody’s paid a penalty in 2017 for contributing to the crisis.

Despite Moody’s track record, no credit downgrade was issued during President Biden’s spending spree. The agency’s chief economist criticized tax cuts but supported government spending as an economic stimulus. Tax cuts, like Reagan’s in 1981 and Trump’s in 2017, can grow the economy and lower the debt burden over time.

The U.S. government’s full faith and credit support Treasury bonds, almost guaranteeing repayment. The timing of the downgrade, coinciding with Congress voting on the Trump tax cut, raises suspicions. However, President Trump’s Trumponomics has attracted over $1 trillion in new investment, indicating confidence in the U.S. economy.

Investors may see the benefits of Trumponomics that Moody’s overlooks. Trumponomics has attracted significant investment to the U.S. and is beneficial for the economy and investors. Stephen Moore questions Moody’s credibility after the downgrade of U.S. federal bonds.



Read more at Yahoo Finance: Why Moody’s credibility should be questioned after downgrade of US federal bonds